The Gold Report: In a recent interview, you were asked if Radisson Mining Resources Inc.'s (RDS:TSX.V) goal was to be an explorer or a small gold producer. You replied, "Why can't Radisson be both?" Tell us your vision for Radisson Mining's O'Brien and Kewagama gold properties near Rouyn-Noranda, Quebec.

Mario Bouchard: Radisson Mining Resources can be an explorer and a small gold producer. Our focus is to put the O'Brien/Kewagama project, our main asset, into production. The O'Brien/Kewagama gold property was the richest mine by grade in Quebec, and it produced over 587,000 ounces (587 Koz) gold. From 1925 to 1956, it provided a head grade of over 14 grams per ton (14 g/t). There is still a lot of free gold in the mineralization. In this market environment, we also keep an eye on other opportunities to try to optimize shareholder value.

TGR: As you suggested, it was considered the highest-grade gold mine in Quebec's Cadillac camp until it closed in 1956. Since then, several companies have owned the properties and attempted, unfortunately with little success, to develop another economic mine there. Radisson earned full ownership of the O'Brien/Kewagama properties in 1999. Give us a brief history of the O'Brien/Kewagama project.

MB: Several companies have owned the properties since 1956 when the price of gold was $35/ounce ($35/oz) and the cost to produce an ounce of gold was rising. Another small operation produced gold from 1978 to 1981. The head grade of that ore was over 4 g/t, but the recovery was only 69%. Hatch Associates, an independent consultant, made some recommendations to improve recoveries but the price of gold fell and the operation closed. After that, Sulpetro Minerals milled some ore from the property but Sulpetro's successor, Novamin Resources Ltd., discovered a new lens, what we now call the 36 East Zone.

In 1989, Breakwater Resources Ltd. (BWR:TSX) bought Novamin but not before it drilled more than 50,000 feet on the 36 East Zone. In 1994, Radisson optioned the property and, in 1999, Radisson bought it outright because Breakwater decided to go into the zinc business and sold its gold assets. Radisson continued to drill the 36 East Zone but only with a small amount of money each year and ultimately missed the last bull market.

TGR: How many meters have been drilled to date?

MB: There are over 75,000 meters (75,000m) drilled on those two lenses on the Kewagama/O'Brien property.

TGR: The key to the mineralization at O'Brien/Kewagama and what makes it more high grade than other deposits in the region is its nugget effect. Tell us more about that.

MB: With an average head grade of 0.32 ounces per ton (0.32 oz/t), our last metallurgical study concluded that 59.2% of the gold contained in the mineralization is free gold. The balance, roughly 40%, is in arsenopyrite ore. The grade in the resource is 0.20 oz/t, but it is really hard to define this kind of deposit by drilling. Historically, the nugget effect also accounted for 60% of the gold contained in the mineralization. The resource estimate was done with a capping on high assays at 1.5 oz/t, therefore, higher assays are not contained in current resources. We want to go underground and complete bulk sampling to demonstrate the nugget effect of the deposit. The 36 East Zone is only 2,000 feet east of the old O'Brien mine. We are really confident that the grade continues along strike.

TGR: What is the plan to process the ore?

MB: There are five milling facilities in a 75-kilometer (75km) radius of the property.

First, we will recover 60% of the gold contained in the ore by gravity concentration. After that, we'll make a concentrate of arsenopyrite that we can send to a smelter. If we produce 500 tons per day (500 tpd), metallurgical test results tell us that we will get about 150 oz/day-90 oz gold from gravity recovery, with the other 60 oz in concentrate. And for production of 500 tpd, the concentrate will be around 10 tpd, so that's not expensive to transport.

TGR: Have you discussed milling options with operators in the area?

MB: We are in the preliminary economic assessment (PEA) phase now; this is part of the process.

TGR: There is a 2% net smelter royalty (NSR) and that remains payable to the previous owner. Can Radisson buy that out?

MB: That 2% NSR is only for the Kewagama property, the eastern part of the project. Buyback is an option. There is no NSR on the O'Brien and the 36 East Zone. There is $1 million ($1M) payable to the old owner, Nyrstar (NYR:BSE), at the beginning of commercial production. That's the only amount payable to the previous owner.

TGR: The Kewagama property was recently added to the PEA that is currently underway on the O'Brien 36 East Zone. What is the thinking behind adding Kewagama?

MB: There was 41,000m drilling done on the Kewagama property, but it was never added to the resource. The NI 43-101 resource estimate will add gold ounces on the property. It should enhance PEA value since we are planning to go underground by decline to access the two lenses, Kewagama and 36 East. That will greatly improve our cost per ounce of gold.

TGR: When will investors see the results of that ongoing PEA?

MB: INNOVEXPLO is the independent consultant working on the PEA. The results should be available by the end of April.

TGR: The current resource calculated by Roscoe Postle Associates Inc. (RPA) and published in October 2013 pegged the Indicated resource at 106 Koz gold and the Inferred resource at 67 Koz. Is that enough to build a mine?

MB: Yes, the current calculation could give the impression that the resource is low, but you have to look at our profile. We would be a small gold mine producing 25-35 Koz/year with enough resource for five to seven years. As I said, the nugget effect was not considered in the estimate that was done by RPA in 2013. That could also improve the production numbers.

The approach and philosophy of Radisson management is to start production and get cash flow as soon as possible to avoid dilution. We want to finance the expansion of this project at depth. History tells us that this mining model is viable. I can think of a few examples like the Dumagami project, which opened the way for Agnico Eagle Mines Ltd.'s (AEM:TSX; AEM:NYSE) LaRonde gold mine, contiguous to our project. There is also the Lapa gold mine 8km east of our project. Agnico put Lapa into production with maybe six or seven years of resources and still it is producing.

TGR: In late December, Radisson closed a private placement totaling $305,000. There were 13 investors who participated, including two of your directors. How will that money be used?

MB: It will be used to finish the PEA, complete the resource estimate on Kewagama and develop a 3-D model of the project. This will be a powerful tool for our geologists. In the meantime, we'll begin the permitting process.

TGR: Your board is strong on technical expertise, but does it have the well-connected "money men" necessary to raise the capital Radisson needs to achieve your vision?

MB: Everybody knows that this industry is experiencing tough times, but we probably need around $30M to reach production. And we have excellent expertise on the board. The mining industry requires a lot of different knowledge. Until now, the need for money was pretty low, so the team we had was sufficient. We will continue to grow and expand our team as we move toward production.

TGR: You need roughly $30M to build the mine?

MB: Yes. The cost to build a decline for this property is around $15M. And we need working capital of around $12M to start production to a depth of 750 feet. That should provide us with four to five years of production.

TGR: What are some advantages that Radisson Mining benefits from by having its key projects in an established mining camp in Quebec?

MB: Quebec, a Canadian province, is a stable political jurisdiction that has mining-friendly tax policies and specialized investment funds, which could help with financing. There is also, and this is really important, social acceptance of the gold mining industry in the Abitibi region, especially in the Cadillac mining camp, where several mines are in production. The environmental legislation in Quebec is perhaps the best in the world and is respected by all the miners. Our property is accessible by paved road. It's only 50km in between two mining towns that offer lots of services and a specialized working pool. Power lines also pass over our property.

TGR: You recently purchased the Lac Gouin phosphate property in Quebec. Would Radisson be willing to ultimately sell that in order to help finance the company's gold projects?

MB: I think phosphorous has a really bright future in the fertilizer business. There have been two big discoveries in Quebec in phosphate, one at Sept-Îles, and the other one is by a company called Arianne Phosphate Inc. (DAN:TSX.V; DRRSF:OTCBB; JE9N:FSE) situated 200km north of the port of Saguenay. Our Lac Gouin property is located 115km south of Arianne's phosphate deposit. It's at an early stage and we will slowly develop the property for the next five to seven years, so selling is not an option.

TGR: Does that take away resources from what you're doing on the gold side?

MB: We don't want to spend too much money on the phosphate side. Our main focus is on our main asset, the O'Brien/Kewagama property. It's good for a small exploration company to have diversified assets.

TGR: Tell us briefly how you see Radisson investors earning a return on their capital.

MB: There are plenty of reasons to invest in Radisson. I think gold is bottoming and the price of gold should move higher moving forward. The Toronto Venture Exchange is at a 13-year low and we are bottoming, so the environment for a small company will look brighter in the near future. I think there will be a rally and Radisson wants to be part of it.

Other catalysts for Radisson include a new resource calculation where we will add ounces. Before the end of April we should receive the PEA, which should open the door for a nondilutive financing to build a decline. We have a market capitalization under $10M, so I think investors have the chance to participate at a cheap price in a company looking to have positive cash flow in 24-28 months. Don't forget that all the properties are open at depth; there is a lot of good value, such as at 3,500 feet underground where we hit 17 g/t gold over 1m. We want to develop this company by generating a cash flow with a small production as soon as we can so we can prove all the potential there is at depth.

TGR: You've been with Radisson for about two years. What are the next two years going to look like?

MB: I think we will be a producer in 24-28 months. As I've said, $30M for a mining project is not a large amount of money. Of course, we still have to think out of the box and take advantage of opportunities that come along, but our main focus is on the O'Brien/Kewagama property.

TGR: Thank you for talking with us today, Mario.

Mario Bouchard is president, CEO and a director of Radisson Mining Resources Inc. From 1984 to 2009, he was an investment adviser for the firm of Lévesque Beaubien, a full-service broker, later acquired by the National Bank of Canada. Bouchard has been a director of the Rouyn-Noranda, Quebec, branch of the Canadian Institute of Mining, Metallurgy and Petroleum for 26 years. He is also president of the Admirio Industriel holding company.

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DISCLOSURE:
1) Brian Sylvester conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
2) Radisson Mining Resources Inc. paid Streetwise Reports to conduct, produce and distribute the interview.
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